Film Financing, the full guide to funding your shorts and features

Film financing is an artform. There is no simple way to finance a feature film, or even a short film or music video. It requires patience, diligence, honesty, and trust.

The following article only covers a few of the many areas of expertise required to finance a film, but it may help you.

As most people reading this article know, to begin with, you must have clear title to a great story – that is ultimately what you are selling. Next, you need to have a great package put together – including talent, production staff, and distribution if possible. This alone can take years to accomplish, and is almost always accompanied by a great business plan. There are lots of great resources out there in order to make your plan it’s best, but let s assume you ve got all this together.

What next?

Depending upon your budget, you ll be pre-qualifying, either formally or informally, your potential investors, and then working hard to make connections with them in order to offer your pitch. Your first order of business on a pitch is to get a second meeting, in short, to earn their trust. It s not always a good idea to push too hard on the first meeting.

Make sure to qualify them not just on the basis of their income and ability to take a risk in film, but on their personality and compatibility with your project. There must be a strong level of trust and a good feeling of the right chemistry between you and your investors if at all possible – you’ll be working with them your whole career if you get it right, and only once if you get it wrong.

Investors also often have a good idea of what budget level they are willing to get involved with. As some people say, it takes just as much hard work to get $10M as it does $2M. Many people who help filmmakers find money work on larger budget film because their payout is higher – which in some, but not all, cases makes sense.

If you’re going with a budget under $2M, you won’t have the benefit of a completion bond to assuage any fears your investors may have. But some film financing advisors, such as Stacy Parks (see below) believe that you must get your budget as low as absolutely possible in order to give your investors the best possible chance for a return on investment (ROI).

In the case of a very low or micro budget film, you may be going to people who have never invested in films, and in such cases, you must know them personally in order to steer clear of any SEC issues (here in the US, that is…) It’s also a benefit to either know your investors or have been introduced by good friends, because again, you’ll be working with them for the life of the film, which can be many years and beyond. Remember, you’re marrying them.

So, you’ve got a meeting with your potential investor, now what?

The first thing they will do is hand your business plan to their lawyers, who will attempt to stop them from investing in a film – it s a risky business. So, the questions they will often ask are about things that are often left out of business plans. Two of these are a financing plan and a viable and unique distribution and marketing strategy. These lawyers will also pick apart your ROI, so make sure your numbers are conservative and as verifiable as is possible in our business.

In terms of financing plans, you should be thinking about all the financial elements that, taken partially or all together, go into a film. These include hard money resources (aside from investments) such as deferments on technical services and equipment, sales guarantees that are bankable or advance cash pre-sales (sometimes around 20% against 80%), cash subsidies, tax incentives (these usually require a large percentage of the budget in place before they can be turned into hard money), and depending on the project, advertisement and sponsor pre-sales. Soft money resources are usually LOI s for pre-sales, and sometimes payroll deferments (this last element is a last resort).

In terms of distribution and marketing and ROI, do your research. You must be able to provide real-world examples of both successes and failures within your genre and budget range and their marketing and distribution strategies, in order to provide a decent and conservative figure that won t make the lawyers roll their eyes.

In all cases, it s usually best to surround yourself with people who know more than you do. Here s a list of resources that may help you on your quest.

For marketing and distribution strategies, Peter Broderick is one of the best in the business. Many of you know who he is. He was instrumental in launching Christopher Nolan s career, through careful guidance of his earliest films.

You’ll be needing a lawyer. If you re LA based, on of the best is Elsa Ramo. She represents several projects I m involved in. I just attended her pre-Christmas party at the Beverly Hilton, and I met at least 15 of her other clients, and they all had the same thing to say – she s amazing, a superstar negotiator, and dedicated to independent film. She’s very fair with her percentages.

If you re looking for places to research your ROI or your casting choices, or anything related to inside information on the film biz, you must get IMDBPro….

Finally, if any of you have a project that you want to see get made, I may be able to help. In addition to business plans and consulting, I m always looking at new scripts, and love to meet new people in the business, especially those not jaded and corrupted by it…